2014 Trends for B2B Catalog Marketers.

2014 will be a big year for B2B Multi-Channel Marketers

With the New Year off to a roaring start it’s helpful to pause and look at the road ahead. Much has happened in the last two years and the pace of change shows no sign of slowing in 2014.  If you are a B2B multi-channel marketer here are 10 things to think about….and, better still, take action on in 2014.

1. Product and service differentiation will again become the focus. “You are what you sell” becomes more and more important in today’s online world of instant information, competitive shopping and supplier access. Marketing teams will spend more time on developing/testing new products and services – the only real tangible differentiators. The pendulum will swing back towards real product innovation from new online marketing tools.

2. New and valuable content will drive mobile application and use. Just having a mobile site will become secondary. Providing educational/training content and applications via mobile to customers “in the field” will drive new customers and retention.

3. The process of market disintermediation will continue as more and more manufacturers sell direct via online marketplaces. Amazon Supply, Ebay and Google will lead these efforts. In addition, vertical marketplace players like Global Industrial and Staples will become increasingly important. Also, manufacturers, increasingly, will take direct control of online content for their products, not the online distributors/sellers.

4. Like mosquitoes in the summer, “Net Knats” will continue to proliferate. They buy products from distributors and wholesalers but will never take possession. They will rely on their wholesaler’s drop ship facilities, have low costs/overheads and take only a 5-10% margin. They will look for fat margin lines to exploit and your best selling product may be next.

5. Amazon and Ebay will expand their B2B SKU offerings…and there will be no stopping them. Look for their B2B SKU offerings to exceed 2 million in 2014. Their “one stop shopping” advantage and superlative delivery and online services will continue to grow. They are adding sales/tech support too.

6. Traditional B2B distributors will falter and fail. It will become increasing difficult to survive when your offering is mostly (if not all) distributed products. Branded, easy to find and buy items (like MRO tools, electronics and office supplies) will be hardest hit.

7. Customers will increasingly rely on other customers for purchasing counsel and advice. The lines of “customer to customer” communication will continue to grow with social media and vertical associations and buying groups. Both manufacturers and competitive B2B distributors will need to co-operate to manage (not control) this increasingly important customer influence.

8. The age and education of your buyer will markedly change the way they research, shop, buy and communicate with B2B sellers. We suggest looking at the behavior of your house file based on age segments and tracking evolving trends over time.

9. Email, online advertising, paid search and other online forms of promotion will continue to increase although their marginal effectiveness will soften as more dollars chase the same customers in the same media channels. Marketers will come to understand that telephone/people relationships are key to continued customer understanding and loyalty as the use of new technologies (one after another) evolves.

10. Survival will require significant change. Sometimes this will be painful. In order to avoid becoming irrelevant traditional B2B direct marketers must change rapidly. Taconic change is hard to achieve within the existing organization and culture. This is exacerbated by the fact that many organizations are reluctant to risk change until they must. Traditional B2B distributors threatened by emerging business models would be well advised to consider sponsoring competitive start-ups designed to compete with existing business models and/or acquire emerging companies based on new business models. Many leading companies now operate multiple brands designed to function in different channel with lower cost structures.

Lots to think about. As always, focus is key. Good Luck! Call if you need help.

All my very best for the New Year!

 

Terence Jukes is president of B2B Direct Marketing Intelligence LLC, a strategic B2B direct marketing consultancy based in Fort Lauderdale, Fla., that services B2B catalog company clients in the U.S., Canada, France, the U.K. and Germany. You can reach him at tjukes @ b2bdmi.com or (954) 383-5221

You may contact me using the form below:
* indicates required field

Powered by Fast Secure Contact Form

Posted in B2B marketing best practices, Catalog Marketing, Catalog Operations, Online Marketing, Terry | Tagged , , , , , , , , , , , , , , , , , , , , | Comments Off

Is the B2B Catalog Dead or Dying?

Many of our clients ask us our opinion on the future of the B2B catalog.  Of course, the answer depends on many things like who your target customer is and what are you selling.  Legacy catalogers also generally have legacy measurement systems that tend to inflate the importance of their catalogs somewhat.   Their new internet only competition does not have such a bias.  Nonetheless, if we believe the short answer to the question is…No, they are not dead yet, but they are dying.

Last year we discussed the approaching “perfect storm” for B2B catalogers.   I would like to revisit and update several of those points as I believe they are key to making your own assessment of the diminished importance of your catalog.

1.    Postal increases and/or cuts in service.   While the deficit problems at USPS have be “kicked down the road” for many years I am getting the sense that this issue might actually get addressed in 2013.   In all likelihood that means a combination of higher rates, closed post offices/distribution and elimination of Saturday delivery.   Combine this with the irreversible downward trend in first class mail volumes and it is hard to imagine how postage, one of the largest expenses for a B2B cataloger will not increase.   Just this week the American Catalog Mailers Association/ACMA sent out two emails warning of pending legislation to dramatically (20%+) increase catalog postal rates.  While increases are bad enough it the lack of predictability in frequency and magnitude that is even harder to deal with.    We have lived through double digit increases with less than six months notice before.   We know that’s very difficult to absorb.  You are wise to plan now for a significant increase in postal rates in 2013. Also think about how your new customer acquisition and development would change if postal rates increased, say, 50% increase over the next 3 to 7 years.

2.    Collection of state sales taxes.    It’s not a secret that the states are strapped for cash and as online sales have increased over the last ten years so has the size of their opportunity.   Our good friends at ACMA (www.catalogmailers.org) are fighting this issue hard on our behalf and along with other interested parties have formed TRUsT, www.truesimplication.org  to fight this particular issue with gusto!    The Marketplace Equity Act Congress) and the Marketplace Fairness Act (Senate) are both in discussion to “level the playing field” and raise billions of dollars for state coffers.    It is interesting to note that Amazon has recently switched sides on this issue and come out in favor of this pending legislation presumably because they already have a presence in many states.  We believe it is not a matter of IF, only WHEN this will happen and advise our clients to have a contingency plan now.

3.    Increased online completion.   With the launch earlier in April of 2013 of www.AmazonSupply.com there has been a significant increase in online competition for B2B catalogers.   Amazon Supply will become the leading B2B buyer marketplace within the next few years.   If you have not already done so take a look at their site to see their broad multi-industry product offering (750,000+ SKUs) that makes them the biggest “one stop shop” by far.   Also note their pricing on your key items, easy 24/7 returns and their fast and inexpensive (free for an estimated 8 million Amazon Prime subscribers) delivery.   Pay attention too to the number of your manufacturers and suppliers who have chosen to sell direct to Amazon Supply.  Also note the competitive responses from Google (GoogleShopping4Suppliers) and Ebay (expanding their business and industrial product range).   B2B online shopping is only going to get easier and cheaper for your customer and that will impact you.

4.    “March to Mobile” Another trend that will negatively impact B2B catalogers who are not prepared is the ever-increasing B2B uses for mobile and voice activated technologies.  For many MRO buyers for example the catalog from their supplier of choice (Grainger?  MSC?) rode along in the truck with them to be consulted when a need arose “in the field”.  Today, smart phone and tablets that are voice activated assist the MRO repair person not only with sourcing a needed product but also with valuable diagnostics and application information.

5.    Improved delivery.  Amazon, Google, Ebay, Sears and many others are testing affordable same day delivery on a range of B2B products.  Amazon is also building their own (lower cost?) delivery system to supplement (compete with?) UPS and Fedex.  In addition, many items can now be ordered and shipped directly from far east sources.   All of this will further erode one of the prime differentiators of B2B catalogs – broad selection with fast delivery.

6.    The coming “tipping point”.    As these trends take hold and as a new generation of more computer savvy B2B buyers takes over what will be the affect on your B2B catalog?   We believe the traditional B2B catalog as we know it is dying and that one-day soon we will reach a “tipping point” where legacy B2B buyers will make the switch.  It will be like the day we finally realized that printed yellow pages or manufacturers directories were not as useful as a Google search.   Those 10-20 B2B catalogs that now sit on a B2B buyers shelf will dwindle to 5-10 and, one day, the buyer will clear the shelf entirely and depend only on his/her computer.   How many B2B catalogs can you name that have stopped circulation in the last 3 years alone?   The “tipping point” is coming.

So, what do you think?   Is YOUR B2B catalog dying?  Is it already dead?  More importantly, how will you respond to these marketplace changes?  How will you adapt and take advantage of emerging technologies and changes in buyer behavior?  Hopefully, you have started down the path of change and already acquire more customers online than through the mails.  Hopefully, adoption of new technologies, “sticky” content, >50% proprietary products and solid customer relationship selling continue to differentiate your brand and hold your customer.   Hopefully you have already reduced your dependence on mailing your B2B reference catalog.

 

Terence Jukes is president of B2B Direct Marketing Intelligence LLC, a strategic B2B direct marketing consultancy based in Fort Lauderdale, Fla., that services B2B catalog company clients in the U.S., Canada, France, the U.K. and Germany. You can reach him at tjukes @ b2bdmi.com or (954) 383-5221

You may contact me using the form below:
* indicates required field

Powered by Fast Secure Contact Form

Posted in Catalog Marketing, Catalog Operations, Online Marketing | Leave a comment

Amazon & other online marketplaces: Opportunity or Threat?

Amazon

Click Here To Download PowerPoint Files

Terence Jukes is president of B2B Direct Marketing Intelligence LLC, a strategic B2B direct marketing consultancy based in Fort Lauderdale, Fla., that services B2B catalog company clients in the U.S., Canada, France, the U.K. and Germany. You can reach him at tjukes @ b2bdmi.com or (954) 383-5221

You may contact me using the form below:
* indicates required field

Powered by Fast Secure Contact Form

Posted in Recent Presentations | Leave a comment

Google Shopping for Suppliers follows Amazon Supply in targeting the B2B market.

As many of you know, we have been expecting Google to respond to the April 2012 launch of AmazonSupply.com by launching their own B2B products shopping site. Recently, and it would seem quietly, they released the new Google Shopping for Suppliers site in beta. To begin with it is only only open for sellers of electrical & electronic products but I would expect that their product offering would expand as their beta site proves itself and Google learns more about B2B sellers and transactions.

Apparently, Google is verifying suppliers before they add their “good housekeeping seal of approval” for listed merchants.
They are also charging a $1000 “yearly verification fee”, required for American suppliers with similar fees for foreign suppliers. (Note the number of Chinese sellers.)
There are also different the data feed requirements and terms and conditions adjusted for the nuances of B2B product sales. I am glad that Google is recognizing those and not trying to force fit B2B transactions into B2C formats. Check out how they handle price, shipping, tax, returns, refunds, etc.

We expect to see more entrants into the B2B marketplace and CSE space. With Amazon and Google now in the game, we can’t help but wonder when eBay or maybe even Facebook will enter?

If you are seeing more online competition from B2B marketplaces, CSEs and other online sellers and want to discuss your strategy to respond please give us a call. We have a number of client assignments in this area so we are in a position to efficiently advise the B2B multi-channel/catalog merchant. While many B2B catalogers may think such new competition is negative we believe that overall if taken advantage of correctly it will be a net positive to your business model. Regardless, online marketing changes are dramatic and they must be addressed.

B2B Sellers: Are you getting your share from Online Marketplaces and CSEs?

I have asked a number of B2B distributors in the last few months if they are confident they are getting their fair share online. Without exception they all told me that their online sales were growing nicely often at more than twice the rate of their offline sales. Then I asked what, specifically, they were getting from the online marketplaces and CSEs-comparison shopping engines. More than half said they were not selling via these online channels. They went on to say that these channels were not B2B focused and “not much of their product moved through these channels. I consider that to be an outdated and competitively dangerous view. Marketplaces like Amazon.com (and now AmazonSupply.Com), Ebay and others move billions of dollars of B2B products. Competitive shopping engines like Google Products, Buy.com, Shopzilla.com and others drive more billons. More importantly such online channels are huge sources of new customer acquisition.

Now, to save some time, I will share with you what I commonly here as “objections” to these channels along with my differing perspective.

1. “They aren’t focused on the B2B buyer”. True, up to now they have not been focused on the B2B but things are changing quickly with the launch of AmazonSupply.com and the realization that B2B products like tools, MRO supplies, laboratory supplies, electronic components and a host of other products (see the 16 product categories offered on AmazonSupply.com) can and are being sold via marketplaces and CSEs. Both see B2B sellers as a new, growing marketing opportunities are adding B2B functionality and services fast.

2. “They don’t sell our kind of products” Wrong! Take your top 100 SKUs and go searching for them on Amazon and the top 10 CSEs. You will be surprise how many of your products you will find and who’s selling them. You will find many new competitors who sell only in these two channels. Your absence has given rise to nibble new competitors who know how to do it and recognized the void in your product area.

3. “The customers we acquire from these sources are not as good as our normal customer.” True, often (not always) they are not. You will need to qualify newly acquired customers from marketplaces and CSEs using RFM, products purchased, SIC, size and other such criteria to profile and prioritize new acquisitions. You know how to do that. Remember however that the reach and presence of these new channels are far beyond anything you generate by mailing a catalog or making sales calls. Broad reach usually increases quantity of response and lowers quality. You may get 1000 new customers a month from these sources but only 100 measure up. That is still 100 new customers you would not have otherwise.

4. “Selling through these channels is complex and difficult”. Online only marketers would say that producing and mailing a catalog or building a telephone sales team is difficult so it’s not surprising what is new to traditional B2B distributors seems difficult at first…. and it is…but the size of the opportunity and the rate of growth dictate that we must become as expert in these new channels as our traditional channels. Fortunately, there are specialized agencies around like Mercent.com and ChannelAdvisor.com to help us optimize our valuable content, manage feeds/orders/feedback and dynamically change our pricing in an ever-changing online marketplace.

5. “Selling on Amazon and other marketplaces costs too much.” Yes, it’s not inexpensive but it’s not just about the cost, it’s about the value and opportunity delivered. What is the cost of not doing it? How does the cost to acquire compare to your mailing and telephone methods of acquiring new customers? What is the quality and lifetime value of the customers acquired in these channels versus traditional channels? How fast are these channels growing versus traditional channels? What is the advertising value in these channels versus traditional channels? What is the value of the business intelligence acquired in these channels? You can see it’s not a simple analysis based on direct cost only.

6. “I want buyers to come directly to my site”. Yes, given the choice, most marketers would want buyers to come directly to their site to maintain control, selling price, margin, etc. But the reality is that buyers are not going to do that. B2B buyers have advantages when they use marketplaces and CSEs. They get better marketplace information, competitive bidding and better prices! Your own business probably shops on marketplaces and CSEs so why shouldn’t your customers? Trying control and drive customers to do what you want them to do will only drive them away.

7. “New customers that come from these online sources do not place a second order” Well, it may be true that their propensity to place a second order may be lower than customers acquired via mailings or on the phone, however, you as the B2B seller does have influence over that. You need to craft new customer welcome programs and second order incentives specifically for these new customers. Treat them differently and chances are you can change their propensity to place a second order.

8. “These channels are all about price, price, price. I don’t want to discount”. Yes, in a more perfect online market more focus is often on price, but we can’t control that. We don’t set the rules of the game; we only control how we play. What we can do is strategically use the dynamic pricing functionality available in these channels (and not available anywhere else in our business) and our ability to optimize our merchandising and content by the specific channel to offset some of the focus on price.

9. “If I sell on Amazon, Amazon sees what I sell and then knocks me off”. Somewhat true, but ask yourself could a competitor know what you sell by looking at the space and positioning of your key items in your catalog? Might you change your sales mix and margin in these channels by manipulating content and your price? Should you miss out on the opportunity because of difficulty in managing one aspect of the channel?

10. “Marketing dollars invested here are risky”. In fact, the opposite is true. Printing and mailing a catalog is risky. You incur all that investment with a fixed and vulnerable offer (usually for the life of the catalog) before one order is received; selling in these online channels generally only incurs costs when you have an order.

11. “I don’t think I am losing sales or customers to these channels” You may not be (but I doubt it) but the fact remains that many of your products are being sold in these channels and if you are not in them you are not getting a piece of the action.

Given the growing importance of these channels, the launch of Amazon Supply and the proliferation and growing specialization of CSEs in my opinion not selling on these channels is not an option. I have now seen too many examples of new market entrants selling exclusively on these channels and building sizable businesses in less than five years. My view is that business should have been yours, the traditional B2B seller except for the fact that you were slow to adopt these new technologies and selling methods. I have also seen many examples of smart B2B distributors mastering these channels and now enjoying 10-25% of their revenues and new customer acquisition coming from these channels with low fixed costs and little risk.

Terence Jukes is president of B2B Direct Marketing Intelligence LLC, a strategic B2B direct marketing consultancy based in Fort Lauderdale, Fla., that services B2B catalog company clients in the U.S., Canada, France, the U.K. and Germany. You can reach him at tjukes @ b2bdmi.com or (954) 383-5221

You may contact me using the form below:
* indicates required field

Powered by Fast Secure Contact Form

Posted in B2B marketing best practices | Tagged , , | Leave a comment

B2B Sellers: Are you getting your share from Online Marketplaces and CSEs?

I have asked a number of B2B distributors in the last few months if they are confident they are getting their fair share online. Without exception they all told me that their online sales were growing nicely often at more than twice the rate of their offline sales. Then I asked what, specifically, they were getting from the online marketplaces and CSEs-comparison shopping engines. More than half said they were not selling via these online channels. They went on to say that these channels were not B2B focused and “not much of their product moved through these channels. I consider that to be an outdated and competitively dangerous view. Markeplaces like Amazon.com (and now AmazonSupply. Com), Ebay and others move billions of dollars of B2B products. Competitive shopping engines like Google Products, Buy.com, Shopzilla.com and others drive more billons. More importantly such online channels are huge sources of new customer acquisition.

Now, to save some time, I will share with you what I commonly here as “objections” to these channels along with my differing perspective.

1. “They aren’t focused on the B2B buyer”. True, up to now they have not been focused on the B2B but things are changing quickly with the launch of AmazonSupply.com and the realization that B2B products like tools, MRO supplies, laboratory supplies, electronic components and a host of other products (see the 16 product categories offered on AmazonSupply.com) can and are being sold via marketplaces and CSEs. Both see B2B sellers as a new, growing marketing opportunities are adding B2B functionality and services fast.

2. “They don’t sell our kind of products” Wrong! Take your top 100 SKUs and go searching for them on Amazon and the top 10 CSEs. You will be surprise how many of your products you will find and who’s selling them. You will find many new competitors who sell only in these two channels. Your absence has given rise to nibble new competitors who know how to do it and recognized the void in your product area.

3. “The customers we acquire from these sources are not as good as our normal customer.” True, often (not always) they are not. You will need to qualify newly acquired customers from marketplaces and CSEs using RFM, products purchased, SIC, size and other such criteria to profile and prioritize new acquisitions. You know how to do that. Remember however that the reach and presence of these new channels are far beyond anything you generate by mailing a catalog or making sales calls. Broad reach usually increases quantity of response and lowers quality. You may get 1000 new customers a month from these sources but only 100 measure up. That is still 100 new customers you would not have otherwise.

4. “Selling through these channels is complex and difficult”. Online only marketers would say that producing and mailing a catalog or building a telephone sales team is difficult so it’s not surprising what is new to traditional B2B distributors seems difficult at first…. and it is…but the size of the opportunity and the rate of growth dictate that we must become as expert in these new channels as our traditional channels. Fortunately, there are specialized agencies around like Mercent.com and ChannelAdvisor.com to help us optimize our valuable content, manage feeds/orders/feedback and dynamically change our pricing in an ever-changing online marketplace.

5. “Selling on Amazon and other marketplaces costs too much.” Yes, it’s not inexpensive but it’s not just about the cost, it’s about the value and opportunity delivered. What is the cost of not doing it? How does the cost to acquire compare to your mailing and telephone methods of acquiring new customers? What is the quality and lifetime value of the customers acquired in these channels versus traditional channels? How fast are these channels growing versus traditional channels? What is the advertising value in these channels versus traditional channels? What is the value of the business intelligence acquired in these channels? You can see it’s not a simple analysis based on direct cost only.

6. “I want buyers to come directly to my site”. Yes, given the choice, most marketers would want buyers to come directly to their site to maintain control, selling price, margin, etc. but the reality is that buyers are not going to do that. B2B buyers have advantages when they use marketplaces and CSEs. They get better marketplace information, competitive bidding and better prices! Your own business probably shops on marketplaces and CSEs so why shouldn’t your customers? Trying control and drive customers to do what you want them to do will only drive them away.

7. “New customers that come from these online sources do not place a second order” Well, it may be true that their propensity to place a second order may be lower than customers acquired via mailings or on the phone, however, you as the B2B seller does have influence over that. You need to craft new customer welcome programs and second order incentives specifically for these new customers. Treat them differently and chances are you can change their propensity to place a second order.

8. “These channels are all about price, price, price. I don’t want to discount”. Yes, in a more perfect online market more focus is often on price, but we can’t control that. We don’t set the rules of the game; we only control how we play. What we can do is strategically use the dynamic pricing functionality available in these channels (and not available anywhere else in our business) and our ability to optimize our merchandising and content by the specific channel to offset some of the focus on price.

9. “If I sell on Amazon, Amazon sees what I sell and then knocks me off”. Somewhat true, but ask yourself could a competitor know what you sell by looking at the space and positioning of your key items in your catalog? Might you change your sales mix and margin in these channels by manipulating content and your price? Should you miss out on the opportunity because of difficulty in managing one aspect of the channel?

10. “Marketing dollars invested here are risky”. In fact, the opposite is true. Printing and mailing a catalog is risky. You incur all that investment with a fixed and vulnerable offer (usually for the life of the catalog) before one order is received; selling in these online channels generally only incurs costs when you have an order.

11. “I don’t think I am losing sales or customers to these channels” You may not be (but I doubt it) but the fact remains that many of your products are being sold in these channels and if you are not in them you are not getting a piece of the action.

Given the growing importance of these channels, the launch of Amazon Supply and the proliferation and growing specialization of CSEs in my opinion not selling on these channels is not an option. I have now seen too many examples of new market entrants selling exclusively on these channels and building sizable businesses in less than five years. My view is that business should have been yours, the traditional B2B seller except for the fact that you were slow to adopt these new technologies and selling methods. I have also seen many examples of smart B2B distributors mastering these channels and now enjoying 10-25% of their revenues and new customer acquisition coming from these channels with low fixed costs and little risk.

Terence Jukes is president of B2B Direct Marketing Intelligence LLC, a strategic B2B direct marketing consultancy based in Fort Lauderdale, Fla., that services B2B catalog company clients in the U.S., Canada, France, the U.K. and Germany. You can reach him at tjukes @ b2bdmi.com or (954) 383-5221

You may contact me using the form below:
* indicates required field

Powered by Fast Secure Contact Form

Posted in B2B marketing best practices | Tagged , , | Leave a comment